The Proper Role of Privacy in Merger Review
CPI Antitrust Chronicle, May 2015 (2)
7 Pages Posted: 5 Jun 2015
Date Written: May 1, 2015
There have been calls for the Federal Trade Commission and U.S. Department of Justice to consider the potential loss of consumer privacy as a factor in their merger reviews and to challenge mergers of firms with large stores of personal data that otherwise pose no competitive issues. I contend that these calls are unlikely to be successful. Standalone privacy concerns cannot be factored into the merger review process in a way that is consistent with longstanding precedent. There are also good policy reasons against incorporating traditional privacy concerns into antitrust doctrine.
Nevertheless, in industries where firms differentiate themselves through their approaches to privacy, a merger could reduce the incentive of a merged entity to compete on this basis. I propose a test, consistent with the Merger Guidelines, to identify transactions that may lead to a substantial lessening of privacy competition. Application of this test leads to two potentially counterintuitive results: that loss of privacy competition is most likely to arise when a merger is between two firms that offer stronger privacy protections than most other rivals and that the injury to consumers from a loss of privacy competition is not necessarily less privacy.
Keywords: Privacy, antitrust, merger review, big data, user data, competition, Clayton Act, Sherman Act, FTC, DOJ
JEL Classification: K21, L40, L41, L43, L44, L49
Suggested Citation: Suggested Citation